CLSA has released a research report revising its target price for XTEP INT'L (01368) downward from HK$5.5 to HK$5.1, yet the brokerage believes market sentiment has likely already bottomed out following the guidance reduction. The firm maintains its "Outperform" rating, citing that the stock's valuation remains inexpensive.

The share price of XTEP INT'L rose 6% on August 25 (yesterday) after the company announced its first-half 2026 results, benefiting from better-than-feared net profit for the period and an attractive risk-reward profile. Amid a challenging retail environment, Xtep has revised its full-year 2026 sales guidance to a low single-digit year-on-year decline, compared with the previous forecast of a mid-single-digit increase, while keeping its net profit margin guidance at a high single-digit level.

The brokerage projects full-year 2026 sales and net profit to decline by 2% and 14% year-on-year, respectively, with a net profit margin of 8.5%. While gross margins are expected to remain stable, operating expenses continue to face pressure from direct-to-consumer related costs, prompting the firm to cut its 2026 sales and net profit forecasts by 6% following the short-term adjustments.